March 19 (Bloomberg) -- The U.K.’s Royal Air Force is
flying 1 million euros ($1.3 million) to Cyprus for military
personnel stationed on the island to ensure they don’t run out
of cash.

The move came after Chancellor of the Exchequer George
Osborne said two days ago that the U.K. will compensate military
and civilian personnel in Cyprus who lose out as a result of the
European Union’s levy on deposits in Cypriot banks to fund a
rescue package for the indebted nation.

“An RAF flight left for Cyprus this afternoon with 1
million euros on board as a contingency measure to provide
military personnel and their families with emergency loans in
the event that cash machines and debit cards stop working
completely,” the Ministry of Defence in London said in an e-mailed statement today. “We will keep this under review and
consider further shipments if required.”

The Mediterranean island nation’s banks will remain closed
at least until March 21. Cypriot lawmakers are due to vote later
today on the 5.8 billion-euro levy on bank accounts, intended to
cut the cost of the rescue package to 10 billion euros.

Sovereign Bases

Personnel are being offered the choice of having their
salaries paid into U.K. instead of Cypriot bank accounts, the
MoD said. The British Army maintains two sovereign bases in
Cyprus, with two resident infantry battalions along with
supporting forces. Some British troops serve with the United
Nations peacekeeping operation on the island.

Osborne said March 17 that all British government and
military personnel whose bank accounts in Cyprus may be affected
by the bailout levy will be compensated. “For people serving in
our military, for people serving our government out in Cyprus --
because we have military bases there -- we are going to
compensate anyone who is affected by this bank tax,” he told
BBC television. “People who are doing their duty for our
country in Cyprus will be protected.”

Osborne confirmed to ministers at a meeting of the Cabinet
today that U.K. employees in Cyprus, including troops and
diplomats, would be compensated for any losses, Prime Minister
David Cameron’s spokesman, Jean-Christophe Gray, told reporters.